A tale of friction between LOL developer Riot Games and Tencent

October 21, 2018 | 0 | 4031| |

League of Legends is one of the original esports titles in the scene. Long before Overwatch league attempted to have a formal structure, Riot Games was already doing something similar. Regardless of who did the franchising first, there is little doubt that League of Legends is one of the biggest esports titles out there. The game has drawn millions of fans from across the world. Recently it has also seen a slight surge in popularity mostly due to the Worlds 2018. However, there are several reports pointing to Riot Games cutting costs as well as Tencent wanting Riot to streamline their economy.

League of Legends is unlike any other esport

At the time of League of Legend’s release, there was no other game in the same category. League of Legends saw massive uptake by the player base across the world. Tencent Games,  which was already an investor when the League launched in the US, decided to increase its stake in Riot Games. They also were the distributors of League of Legends in China which is the biggest market for League of Legends.

According to a recent report, Tencent Holdings has asked Riot Games to curb its spending. After years of growth, League of Legends has seen declining player base numbers across various parts of the world. The advent of new games such as Fortnite and PUBG have definitely not helped Riot Games financials. But Riot Games has a lot of spending across the world. With international offices, regular office parties and a burgeoning employee count, Riot Games needs to work on their efficiency.

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Declining revenues and drastic measures

League of Legends has some of the highest viewership numbers in the industry.

The World Championships are the most important tournament in League of Legends. They feature teams from various parts of the world and a formal broadcast. Every year Riot Games would fly several employees across the world to the venue. This is similar to that of almost all major esports tournaments. However, this year, the casters will be casting the Worlds from Los Angeles. This is obviously a way to cut costs for the company, however, it seems to be a very drastic measure.

For a gaming company with only one well-known title to its name, Riot Games has definitely come a long way. From expanding League of Legends across the world to ensuring the setup of a successful esports league, Riot has done it all. But what it has failed to do is keeping up its ability to have its revenue more than its spending. The Rapid expansions plans have definitely hurt Riot Gaming as they now face an unsustainable financial path. According to the report by Information.com, Riot Gaming’s top executives gathered their employees and explained this situation to them. The very fact that they need to explain the economy of the company to their employees is not a good sign for Riot Games.

Tencent has moved on to other titles

Tencent Games is the big powerhouse behind Riot Games. The company was established in 2003 to focus on online games. As of 2018, it is the biggest gaming company in the world. In 2017, Tencent Games accounted for 40% of the total investment in gaming. It is the biggest name in the gaming industry with stakes in various titles such as League of Legends, Fortnite and PUBG. In addition to PC Games, it also has a wider portfolio when it comes to the much more lucrative mobile gaming business. It owns Honour of Kings [ Arena of Valour], as well as a Majority stake in Supercell and Miniclip.

Tencent and Riot Games friction started with the announcement of LOL-like Arena of valor.

With Riot’s refusal for the development of a mobile version for League of Legends, Tencent decided to make one themselves. The initial screenshots of their game were a shock to Riot Employees who raised the issue with the founders. Tencent later changed their game enough in order to distinguish itself from League of Legends. The Mobile Game Honor of Kings became an instant hit in the Chinese region. Soon enough, it became the biggest mobile game in the world. Tencent Games was correct when it wanted Riot Games to develop a mobile version of League of Legends. They had the right idea and adequate research to back the idea.

But Riot’s refusal and the subsequent success of Honor of Kings was a thorn in their relationship. Post-2016, when Riot Games saw a declining player base and the introduction of new titles in the market, Tencent seemed to move away from the league. Still the owners of Riot Games, Tencent games invested in Fortnite and the distribution of PUBG. The massive success of the Battle Royale genre only pulled them away from League of Legends.

Cutting Costs

Riot Games Merchandise store – Esports orgs need to figure out sales from merchadnising

Riot Games decision to not send casters to the Worlds comes after several layoffs across various offices. The spending cutback comes as Tencent has started to ask about Riot Games’ spending. This is the primary reason for the focus on restructuring their finances and establishing leaner operations.

The community had a very negative reaction to Tencent Games’ decision of not sending the casters to the Worlds. The casters are one of the most important links for viewers to experience the championships. Staying in Los Angeles will not help the casters to create the same amount of hype and excitement for the tournament. And we cannot blame them either. After all, casting a World Championship game from an enclosed studio does not exactly call for an experience. The casters cannot see the production live, they cannot see the enthusiasm of the players and thus they don’t get the same feel of being in a tournament setup.

League of Legends is not dead but is being efficient

The survivability of any esport title depends on multiple factors. These factors range from game development to managing the community as well as allowing the esports side to be profitable.

For League of Legends, the rapid expansion and the increasing costs have definitely proven to be a big drain on its resources. The game is still one of the biggest esports titles in the world. The ongoing Worlds 2018 is an example of how League of Legends still manages to bring in big numbers for Riot Games. League of Legends reached peak Twitch viewership numbers during Cloud9 qualification for the Playoffs.

Cloud9 managed to make it to the playoffs at Worlds 2018.

Despite League of Legends is as big as it is, there is always room for it to grow. As such Riot Games and TBS owned Eleague are providing viewers with an easy to understand segment regarding LOL. This will educate viewers on the basics in League of Legends and entice them to play the game.

With the franchise system coming in next year, we will witness teams wanting to increase profit margins. This is not the end of the world as long the quality of the broadcast and the game itself do not suffer. For now, you can watch the Worlds 2018 playoffs on Riot Games’ Twitch channel.


The author

Esports journalist. An esports fan, former wannabe pro and occasional angry young man. You can find him trying to climb the Dota 2 MMR or just chilling in Rocket League. Or maybe building an entire city in Cities: Skylines. The current mood is always a surprise.

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